Thursday, 26 April 2018

The Need for Speed on Skin


Yet another speeding fine - 47 MPH in n  M4 variable speed area that was apparently showing 40 MPH. If I got done, then everyone else in my lane also got done. That's 3 offences within 3 months - and I've only ever had one previous speeding fine before in my life, and that was some 20 years ago.

I've some to the conclusion that Facebook should charge people for access. It's the only way to stop stupid people from posting utter garbage. If they were to put their money where their mouths are, they'd be silent. As an aside, do you know how Whetherspoons got its name? Tim Martin wasn't sure if his targeted clientele could use cutlery.

I'm currently reading Nassim Nicholas Taleb's latest book, Skin in the Game. He's an infuriatingly disdainful writer, yet he does have some very interesting ideas. I'm convinced this book has been nowhere near an editor, but given his disdain for 'experts', I'm not surprised. According to Taleb, the reader is the expert and his books will live or die by the reader's reaction. There's a certain validity to that, but and editor might make it easier to follow his trains of thought.


I'm only half way through, but the nub of the book is that there's no need for fancy regulation of financial businesses if the people running them have 'skin in the game'; in other words, their salary, bonuses and even position are dependent on performance and they could lose everything through a wrong decision - they're made to share the risk in a decision. He is furious that certain people during the financial crash were bailed out by tax payers and got off scot-free - gambling with other people's money without sharing the risk.

Just think if a CEO were to be limited by law to a basic salary of a certain multiple of the lowest paid employee - to reflect responsibility - and the rest was linked to performance. Risky decisions would surely decrease.

He maintains it's better to invest in a company where the name of the company is the owner's name, as the owner's reputation and personal money is at stake and any risk is calculated risk rather than speculative. He obviously excludes Lehman Brothers from that proposition. although, to be fair, the last Lehman to be associated with the business died in 1969. He maintains that as there are few penalties for bad performance, people who trash companies merely go on to repeat their bad performance in other companies.

He also has a problem with the manner in which wealth inequality is calculated, as it assumes no movement within the spectrum, whereas if movement is dynamic there isn't such an issue. He cites that while in the USA the families who are the most wealthy today weren't wealthy 30 years ago, those in Europe, and especially France, have been wealthy much longer - in the case of France, 400 or even 500 years, and with the connivance of government.


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